It declared two separate dividends.
The fund declared a 6.9% dividend for its conventional fund or Simpanan Konvensional, and 6.4% dividend for its newly launched Islamic fund, Simpanan Shariah.
This entails a RM44.15 billion payout for the former and RM3.98 billion for the latter.
But why is the Simpanan Shariah dividend lower than its conventional counterpart?
“In Shariah assets, we have no exposure whatsoever to the global conventional banking system, mainly global banks and global insurance companies.
“Those sectors outperformed in 2017 following a very bad year for them in 2016,” said EPF CEO, Datuk Shahril Ridza Ridzuan in a media briefing today.
Shahril said, global banks do not fit into the Shariah-compliant circle, and therefore returns from these investments could not be factored into the Simpanan Shariah dividends.
“A number of impairments that we took were primarily in Shariah stocks, in the oil and gas sector as well as the mobile telecommunications sector, primarily in Bursa Malaysia.
Simpanan Shariah take up slow to pick up?
Since it was first announced in June 2016, some 705,485 EPF contributors have opted to switch to Simpanan Shariah, from a total of roughly 14 million EPF contributors.
From the RM100 billion allocated for the scheme, only RM68 billion have been taken up in the past 20 months.
“Take up has actually been in line with our expectations. We provided for RM100 billion just in case demand was far in excess of what we had provided,” said Shahril.
He said after Simpanan Shariah was launched, the fund found that there were two sets of EPF members with two different priorities.
“In 2016 when we first launched, for the 700,000 people who switched first, they were the ones who were very keen on Shariah compliant products even though there was no dividend track record.
“They weren’t too worried about what the dividend is going to be, they just wanted a Shariah compliant product,” he says,
Will the lower dividend affect Simpanan Shariah take up?
Shahril says the 6.4% dividend announcement will in fact nudge some of the doubtful lot in the right direction.
He said the low take up so far may be due to those who were waiting to see what kind of dividend will the Simpanan Shariah bring, before making the jump.
In fact he said, ever since the dividend was announced on Saturday, there has been an increase in members showing up at EPF counters throughout Klang Valley and the East Coast who would like to switch to the Simpanan Shariah.
“We expect with our first Shariah dividend, the fence-sitters who would like to have a Shariah product, but are still focused on dividend, they will start to see that the dividend is actually quite okay and they’ll start to come in,” said Shahril.